A CCID Consulting's survey on China's semiconductor lighting market
reveals that the substitution effect of LED on the traditional lighting
market has greatly boosted the demand on semiconductor lighting, thanks
to the state’s policy supports, manufacturing cost reduction and
breakthroughs in luminous efficiency and other technologies. By the end
of 2011, the size of China's semiconductor lighting market reached RMB
21.14 billion, up 32.6% year-on-year. Meanwhile, the huge market
potential will promise a fast and stable growth of China's semiconductor
lighting market in the coming years.

(1) Newly issued state policies facilitated the development of the
semiconductor lighting market on a large scale.

In 2011, China’s Ministry of Science and Technology proposed in the 12th
Five-year Plan on Science and Technology Development that by 2015, the
semiconductor lighting market should take more than a 30% share of
China's general lighting market, with an expected annual output value of
RMB 500 billion. Meanwhile, efforts should be made to vigorously promote
China's semiconductor lighting industry to edge into the world's top
three.

(2) Although high-end application markets are still dominated by joint
ventures, domestic enterprises have been enhancing their competitiveness.

At present, the high-end application markets including LED automobile
lighting market and LED general lighting market are still dominated by
manufacturers from Europe, the US, Japan and Taiwan. Over years of
development, however, domestic enterprises have significantly enhanced
their competitiveness in a fast way, indicated not only by the
continuous improvement of technologies, but also constant expansion of
their business scales.

(3) Business model and relevant standards need improving.

Over the past years, the development of China's LED road lighting was
far below market expectations. China's LED road lighting market mainly
relied on the government's demonstrating engineering procurement,
showing a high dependence on the national policies. For this reason,
sound market environment and mature business development mode are the
key to the healthy development of the market. Besides, at an initial
stage of development, the market’s competition has not been regulated
yet. Therefore, sophisticated product testing standards need to be
developed.

(4) Enterprises expand by going public and M&A.

In 2011, China's LED enterprises entered a peak period of share reform
and company listing. Meanwhile, in order to seize a share in the
semiconductor lighting market, create a vertical industrial chain and
improve the horizontal supporting systems, the LED industry initiated a
tide of consolidation, M&A and internal integration.

(1) Reducing lamp cost will be key to the development of semiconductor
lighting.

Currently, cost is one of the biggest problems hindering the
popularization of semiconductor lamps. As lamps also need driving power
supplies, heat dissipation parts, lenses and other parts, cost reduction
of such parts is equally important. In addition, improvement of light
quality is crucial to the promotion of application of such lamps in
interior lighting which highly focuses on color temperature and color
rendering.

With the development of the functional lighting market, the demand for
power-type and surface mount-type LEDs will grow rapidly. Besides, the
growing LED application in automobile lighting will also drive the
demand for such LEDs.

(4) Smaller and integrated semiconductor lighting products will be
popular.

As smaller electronic products with lower power consumption will
inevitably prevail, the terminal product manufacturers will require
smaller parts, including LED products.

About CCID Consulting Co., Ltd.

CCID Consulting Co., Ltd., the first Chinese consulting firm listed in
the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong
(HKSE: 08235) and the first consulting firm which gets ISO 9001
international and national quality management system standard
certification, is directly affiliated to China Center for Information
Industry Development (hereinafter known as CCID Group). Headquartered in
Beijing, CCID Consulting has so far set up branch offices in Shanghai,
Guangzhou, Shenzhen, Xi’an, Wuhan and Nanjing with over 300 professional
consultants. The company’s business scope has covered over 200 large and
medium-sized cities in China. CCID Consulting provides customers with
public policy establishment, industry competitiveness upgrade,
development strategy and planning, marketing strategy and research, HR
management, IT programming and management services, investment and
financing, and M&A. The company's customers range from government
departments at all levels and diversified industrial parks, to
industrial users in strategic emerging industries in new generation
information technology, energy saving and environmental protection,
biological science and technology, high-end equipment manufacturing, new
materials, and new energy. CCID Consulting commits itself to become the
No. 1 advisor for urban economy, the No.1 consultancy for enterprise
management, and the No. 1 branch for informatization consulting in China.